Market review: the index fluctuated and fell, led by national defense and military industry
Today, the Shanghai and Shenzhen indexes continued to fluctuate and fall throughout the day. As of the close, the Shanghai index fell 1.02% to 3595.18 and the Shenzhen index fell 1.80% to 14525.76. In terms of sectors, banks, household appliances, petroleum and petrochemical industry led the increase, while defense and military industry, electronics and power equipment led the decline. The turnover of the two cities was 1305.11 billion yuan, an increase of 3.06% over the previous trading day and 22.10% over the average of the previous five days. The net purchase of Shanghai Stock connect was 2.92 billion yuan, the net purchase of Shenzhen Stock connect was 126 million yuan, and the net purchase of northbound funds throughout the day was 3.046 billion yuan.
Market focus:
The organization of Petroleum Exporting Countries (OPEC) and non OPEC oil producing countries held their 24th ministerial meeting by video on the 4th and decided to maintain the original production increase plan. According to the OPEC statement, the participating oil producing countries reaffirmed the production adjustment plan and monthly production adjustment mechanism approved by the 19th ministerial meeting and decided to increase the total monthly production in February this year by 400000 barrels per day according to the original schedule. OPEC’s statement downplayed the impact of the mutant covid-19 virus Omicron strain, saying that its impact was mild and short-lived and did not seriously hit oil demand. In addition, the economic prospects of developed and emerging economies are relatively stable, and the world has the ability to cope with the challenges such as the epidemic.
Strategy suggestion: focus on the financial sector
Today, the decline of the two markets expanded, and the Shanghai and Shenzhen indexes fluctuated downward all day. Northbound funds realized net inflow for 7 consecutive days, and the market turnover increased sharply yesterday, breaking through 1.3 trillion yuan. At present, the market activity increased significantly in the two trading days at the beginning of the year. At the macro-economic level, clinical data show that although the infectivity of Omicron has increased significantly compared with Delta, the hospitalization rate and mortality rate have decreased significantly, and the pessimistic expectations of overseas markets continue to repair in the near future. OPEC + maintains the original plan for increasing production, and the global economy will continue to recover in 2022, and the impact of the epidemic will probably slow down. On the one hand, the drop in the mortality rate and hospitalization rate makes it difficult to reproduce the “shutdown” of production under the background of continuous superposition of high inflation in the global supply chain and the “cost performance” of large-scale blockade and isolation implemented by overseas countries again. On the other hand, with the steady progress of the production increase plan and the reduction of mining costs, there is little probability that overseas energy prices will rise further, or will peak and fall, resulting in a slight slowdown in global inflationary pressure. Based on the above logic, we predict that the Federal Reserve may raise interest rates once in the middle of the year and once in the third quarter of the year. At the same time, with the expected repair of recent demand and the Fed’s replenishment of strategic inventory imminent, crude oil prices may remain high in the short term. In terms of the general trend of a shares, the structural market continues to deduce, and may run through 2022.
In terms of sectors, the petroleum and petrochemical sector led the increase, or was mainly driven by the expectation of global demand recovery. The banking and insurance sectors performed strongly. We believe that with the Spring Festival approaching, the central bank is expected to strengthen the release of liquidity in the second half of the month. At present, the cost side of banks has improved significantly, or it may drive profits upward. It is recommended to pay attention.
